Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIRs)

A Petroleum, Chemicals and Petrochemicals Investment Region, or PCPIR, is a very large, specially planned area (about 250 sq km) where refineries, chemical plants, petrochemical units, housing and services are all built together. Each PCPIR is built around one big "anchor" unit, usually an oil refinery or a cracker plant, that supplies basic raw materials to the smaller plants around it. India brought in the PCPIR policy in 2007 to create world-class chemical hubs like those in China, Singapore and the Middle East.

Why were PCPIRs created?

Chemical and petrochemical plants work best when they sit close together. A refinery makes products like naphtha, which a cracker turns into basic chemicals like ethylene and propylene. Other plants turn those into plastics, fibres, paints and medicines. If all these plants are in one place, they can share pipelines, ports, power and waste treatment, and save huge costs. The government's idea was to gain the benefits of co-siting (being located together), better networks and shared infrastructure, and so boost manufacturing, exports and jobs.

Where did the idea come from?

The Government of India first floated the idea of "chemical hubs" around 2005. In 2007, the Department of Chemicals and Petrochemicals reworked and expanded it as the Policy Resolution for Promotion of PCPIRs. Under it, the Centre approved PCPIRs in:

• Gujarat (Dahej) and Andhra Pradesh (Visakhapatnam-Kakinada): approved in February 2009
• Odisha (Paradeep): approved in December 2010
• Tamil Nadu (Cuddalore-Nagapattinam): approved in 2012

A PCPIR at Haldia-Nayachar in West Bengal was also approved earlier, but the state government told the Centre in February 2012 that it would not develop it.

How is a PCPIR designed?

• Total area of about 250 sq km.
• A processing area of at least about 40% (around 100 sq km) for factories, logistics and related services. It need not be in one piece.
• A non-processing area for homes, shops, schools, hospitals and offices.
• A PCPIR can include Special Economic Zones (SEZs), industrial parks, Free Trade and Warehousing Zones and Export Oriented Units. These keep their own benefits.
• The state does not have to buy (acquire) the whole area. It notifies the area for planning and zoning, so that growth happens in an orderly way.

Who does what?

• Central government: The Department of Chemicals and Petrochemicals (Ministry of Chemicals and Fertilizers) is the nodal department. The Centre approves PCPIRs (final decision by the Cabinet Committee on Economic Affairs, after a High Powered Committee checks the proposal). It provides external links like rail, national highways, ports, airports and telecom, using viability gap funding (VGF) through existing schemes.
• State government: It plays the lead role. It picks the site, sends the proposal, notifies the area, helps get land, and provides power, water, state roads and effluent links. It sets up a Management Board to develop and run the PCPIR.
• Developer and anchor tenant: A developer (or co-developers) builds and runs the internal infrastructure. Users pay for using the infrastructure.

How have the PCPIRs performed?

The four approved PCPIRs had a combined projected investment of about ₹7.63 lakh crore and expected direct and indirect jobs for about 33.96 lakh people on full completion. Results have been uneven:

• Dahej (Gujarat), 453 sq km: The most successful. Its anchor, ONGC Petro additions Limited (OPaL), commissioned its cracker in March 2017.
• Paradeep (Odisha), 284.15 sq km: Its anchor, the Indian Oil Corporation (IOCL) refinery, was commissioned in February 2016. Progress beyond that has been slower.
• Visakhapatnam-Kakinada (Andhra Pradesh), 640 sq km: The largest by area, but its anchor unit has been pending.
• Cuddalore-Nagapattinam (Tamil Nadu), 256.83 sq km: Dropped. In February 2020, Tamil Nadu passed a law declaring the Cauvery delta a Protected Special Agricultural Zone, which bars new chemical processing plants and hydrocarbon exploration there. The state had already announced it was scrapping the PCPIR after local opposition over farmland in the delta.

Commonly confused concepts

• PCPIR vs SEZ: An SEZ is a zone with special tax and customs benefits for exports. A PCPIR is a much bigger planned region for one sector, and it may contain SEZs inside it.
• PCPIR vs Industrial Corridor: An industrial corridor (like the Delhi-Mumbai Industrial Corridor) is a long belt of industrial cities along a transport route, covering many sectors. A PCPIR is one region focused on petroleum, chemicals and petrochemicals.
• PCPIR vs Chemical Park (BHAVYA-Rasayan): A PCPIR is about 250 sq km and the Centre mainly funds outside links through VGF. A BHAVYA-Rasayan chemical park needs a minimum of 8 sq km, and the Centre gives a direct grant (up to ₹1,000 crore) for common facilities inside.
• Refinery vs Cracker: A refinery breaks crude oil into fuels like petrol and diesel, and also naphtha. A cracker "cracks" (breaks down) naphtha or gas into basic petrochemicals like ethylene and propylene.

Issues, criticism and the way forward

• Slow progress: Apart from Dahej, the PCPIRs have attracted much less investment than planned. Delays in anchor projects held back everything else.
• No grants: The 2007 policy has no provision for direct grants; support comes only for external links through VGF. In 2022, the government said it was seeking views from stakeholders to revise the policy.
• Land and farmers: Very large areas often include farmland and villages, which leads to protests, as seen in Tamil Nadu.
• Environment: Concentrating hazardous industries in coastal and delta areas raises worries about air and water pollution, safety and fisheries.
• Way forward: Experts and NITI Aayog have suggested revamping old clusters, building new chemical hubs with ready infrastructure, better port links and faster, transparent environmental clearances. Newer schemes like BHAVYA-Rasayan apply these lessons on a smaller, faster scale.

Concepts to Know

• Anchor tenant: The first and biggest unit in an industrial region, like a refinery. Its presence draws smaller units that depend on it, the way a big supermarket draws other shops to a mall.
• Petrochemicals: Chemicals made from crude oil or natural gas, such as ethylene and propylene. They are used to make plastics, synthetic fibres, rubber and many other goods.
• Naphtha: A light liquid made when crude oil is refined. It is a key feedstock for crackers.
• Viability Gap Funding (VGF): A one-time money support from the government to make an infrastructure project financially workable when its income alone would not cover its costs.
• Nodal department: The main government department responsible for running and coordinating a scheme.